FT : US rushes to catch up with China in supercomputer race

US rushes to catch up with China in supercomputer race
World’s biggest economies battle to dominate advanced processing power that will effect defence and climate modelling

The US is about to vault into a new era of supercomputing, with a once in a decade leap forward in processing power that will have a big effect on fields ranging from climate change research to nuclear weapons testing.

But the national swagger usually prompted by such breakthroughs is likely to be muted. China passed this milestone first and is already well on the way to building an entire generation of advanced supercomputers beyond anything yet in use elsewhere.

What makes the advances all the more remarkable, according to US experts in the field, is that China’s achievement was made with local technology, after Washington blocked access to the American hardware long considered to be critical to such systems.

The build-up in China’s supercomputing program, which dates back more than two decades, has led to a “stunning situation” where the country now leads the world, said Jack Dongarra, a US supercomputing expert.

The most advanced supercomputers are used to improve simulations of highly complex systems, for instance creating better models of climate change or the effects of nuclear blasts. But their secret use in classified areas, such as defeating encryption, is likely to also make them key tools in national security, according to Nicholas Higham, professor of mathematics at the University of Manchester.

China already had more supercomputers on the Top 500 list of the world’s most powerful computers than any other country — 186 compared with 123 in the US. Now, by beating the US to the next big breakthrough in the field and planning a spate of such machines, it is in a position to seize the high ground of computing for years to come.

The Chinese breakthrough has come in the race to build so-called exascale supercomputers, systems that can handle 10 to the power of 18 calculations per second. That makes them a thousand times faster than the first of the petaflop systems that preceded them more than a decade ago.

In recent months, work has been under way at the US Department of Energy’s Oak Ridge national laboratory in Tennessee to assemble and test the first of three exascale systems planned in the country. If the inevitable “bugs” are ironed out, the arrival of exascale computing in the US could be confirmed at the end of May with the publication of the twice-yearly Top 500 listing, according to Dongarra who maintains the list.

By contrast, China’s first exascale system has been running for more than a year and has since been joined by a second, according to a recent presentation by David Kahaner, director of the Asian Technology Information Program, whose research is widely cited as the most authoritative.

China has not officially disclosed that it has two exascale systems. But their existence was confirmed late last year when scientific research run using the machines was entered for the Gordon Bell prize, with one paper taking top honours in the international supercomputing competition.

The country with the most advanced supercomputers has a clear advantage in national defence over its adversaries, said Horst Simon, who until recently was deputy director of the US energy department’s Lawrence Berkeley national laboratory.

China’s decision not to officially confirm its supercomputing breakthrough is a departure from decades of history in the field, where scientists usually talk openly about their achievements and countries have been quick to claim bragging rights to the top machines. The secrecy may have been to prevent further retaliation from the US, according to experts.

Washington imposed targeted sanctions against five Chinese organisations involved in supercomputing in 2019, then followed up a year ago with another round against seven more groups. The second wave was put in place the month after China’s first exascale system had been fired up.

A previous Chinese effort to break the exascale barrier had relied on technology from US chipmaker AMD, leaving it vulnerable to US trade restrictions. In contrast, its current two exascale systems are based on domestic chip designs. The local developers of the chips used in the two giant new systems — Tianjin Phytium Information Technology and Shanghai High-Performance Integrated Circuit Design Center — were both on last year’s US sanctions list.

“I think it’s quite impressive that they were able to put in place a system based on their own technology over a very short period of time,” said Dongarra. He added that it was unclear whether the chips were manufactured in mainland China — which is still years behind in matching the world’s most advanced chip fabs — or in Taiwan.

China has been building a domestic industry around supercomputing for years, first shocking its main rivals in the US and Japan in 2000 when it unveiled what was then the world’s fastest machine. But the dawn of the exascale computing era could be a chance to grab a clearer lead.

While the US has three exascale systems in the works, China’s goal is to have 10 systems by 2025, according to Kahaner. His research shows Chinese companies are now more focused on domestic competition than on what their international rivals are doing. As a gap opens up between the two nations, the US should consider loosening its sanctions against China’s leading national supercomputing centre at Wuxi in the hope of “a deeper glimpse into these [Chinese] systems”, according to Kahaner.

Despite China’s lead in hardware, Kahaner and others point to the breadth of US capabilities as a strength, particularly when it comes to software. Half of the $3.2bn cost of the US energy department’s three exascale computers stems from a decade-long effort to write programs to run on the new computing architecture. Also, Chinese research in advanced mathematics seldom shows up in fields related to supercomputers, said Higham.

Regarding his call for greater collaboration between China and the US, Kahaner said: “Access to new systems allows experimentation, which benefits all parties. To the maximum extent possible, consistent with security and fair/balanced competition, more access is better.”

But with China yet to publicly acknowledge its new supercomputing prowess and the US still pressing for sanctions against China to try to limit its rise as a tech power, that may remain a distant hope.

FT : Big investors increase cash holdings to highest levels since 9/11 attack

Big investors increase cash holdings to highest levels since 9/11 attack
Bank of America survey shows increased allocations to cash and sharp fall in tech company exposures

Cash holdings among global fund managers have risen to their highest level since the 9/11 terrorist attacks in the US in a shift that reflects large investors’ worries about the deteriorating outlook for stock markets.

Cash balances have swelled to 6.1 per cent on average across the portfolios of global asset allocators according to Bank of America, which canvassed views from 288 investment professionals that together oversee assets of $833bn for pensions plans, insurance companies, asset managers and hedge funds.

The shift into cash — which is typically in vogue during periods of heightened risk aversion — coincides with a significant weakening in expectations about corporate earnings. A net 66 per cent of fund managers in May said they expected global profits to weaken, a low comparable to other crisis periods including the 2008 implosion of Lehman Brothers and after the dotcom bubble bust in 2000.

Michael Hartnett, chief investment strategist at Bank of America, said that sentiment among investors was now “extremely bearish” with a net 13 per cent of fund managers swinging to a “underweight” position in equities compared with a net 6 per cent “overweight” in April.

“There has been a lot of damage to investors’ psychology and this is the result,” said Hartnett.

Wall Street analysts have been revising up their US corporate earnings forecasts for this year since January and Hartnett said that a small piece of good news might result in a temporary market rally. But he also cautioned that the “ultimate low” for equities had not yet been reached with the MSCI All Country World index, a global benchmark, down almost 17 per cent in dollar terms since the start of the year.

The US Nasdaq Composite has dropped by almost a quarter since the start of the year, sinking into a bear market as investors have shifted away from previously highly rated tech companies.

Global fund managers have held a consistently “overweight” exposure to technology stocks for the last 14 years but the allocation plummeted to a net 12 per cent “underweight” in May.

“This represents the biggest ‘short’ in tech since August 2006,” said Hartnett.

Goldman Sachs is holding an “overweight” position in cash and on Monday downgraded equities to a “neutral” position on a three-month view.

Christian Mueller-Glissmann, a strategist with Goldman in London, said that investors would need to see a “convincing peak” in inflation — which is running at a 40-year high in the US — before risk appetite could stabilise.

“Stocks are now negatively correlated with inflation expectations, suggesting investors are much more worried about inflation risks and their impact on equities,” said Mueller-Glissmann.

Richard Dunbar, head of multi-asset research at Abrdn, the Edinburgh-based asset manager, said that high and persistent levels of inflation were fuelling doubts over whether the Federal Reserve should avoid pushing the US economy into a recession in order to restore price stability.

“Investors are not yet pricing in a US recession but there is increasing pessimism about the Fed’s ability to ‘thread the needle’ with monetary policy to achieve a soft landing for the US economy,” said Dunbar.

FT : How can Covid-19 affect the human brain?

How can Covid-19 affect the human brain?
Scientists are trying to understand the cause of neurological effects and whether symptoms will be long-lasting

The cognitive impairment caused by severe Covid-19 is comparable with the decline that takes place between the ages of 50 and 70, according to a recent study by Cambridge university and Imperial College London.

Researchers said the degeneration was equivalent to losing 10 IQ points. The findings, published earlier this month, were the latest in a series of studies that suggest Covid-19 has an impact on the brain.

The lasting impact of Covid-19 on the millions who have contracted it is still being assessed more than two years into the pandemic, with few areas of uncertainty as urgent and unsettling as the potentially enduring effects on the brain.

Scientists are examining the precise mechanisms causing neurological effects and whether symptoms will prove to be temporary, or the heaviest health burdens may still lie in the future.

What are the most striking findings about Covid-19’s impact on the brain?
Amid a growing body of anecdotal evidence, Alzheimer’s Disease International, a federation of dementia associations suggested in September that the degenerative effect of coronavirus could fuel the “pandemic of dementia”. The World Health Organization estimates that the number of people living with dementia, currently some 55mn, will rise to around 80mn by 2030 as the elderly population grows.

A study from Oxford university researchers published in March found tissue damage and shrinkage in parts of the brain related to smell in people who had only mild bouts of Covid-19. Researchers, who analysed nearly 800 brain scans from the UK Biobank — one of the world’s largest biomedical databases — found a reduction in whole brain size compared with people who were not infected and, on average, greater cognitive decline.

Loss of the sense of smell, which people began noting in the early days of the pandemic, may have been caused by damage to the olfactory nerve which extends into the brain and conveys this function, according to a study published in JAMA Neurology last month.

How concerned are experts?
Dr S. Andrew Josephson, chair of neurology at the University of California, San Francisco, and editor in chief of JAMA Neurology, said people with even mild Covid described symptoms, such as mental fatigue, that might be related to the brain. “We’re seeing more and more studies that show changes in the brain that may be associated with it,” he said.

Difficulties with memory, language and concentration are among a broad range of symptoms that fall under the umbrella term “long Covid”. Defined as suffering symptoms for 12 weeks or more after a Covid-19 diagnosis, medical experts have estimated it affects more than 100mn people.

Other experts agreed that superficially worrying findings may not be as concerning as they first appeared.

“The majority of patients we’re seeing clinically have . . . a disorder of concentration and the ability to direct your thinking,” said Alan Carson, consultant neuropsychiatrist at Edinburgh university. “It’s very unpleasant, but it’s not a permanent neurodegenerative state — it’s treatable.”

Serena Spudich, professor of neurology at the Yale School of Medicine, said it was not clear how much changes in the brain are specific to Covid, nor their significance. “People may lose some grey matter and it may have little real-life meaning”, she said.

What research is under way to find out more?
Research into the connection between Covid-19 and dementia is in its early stages. Scientists said it was theoretically possible that the disease could affect the brain in a similar way to some other viruses.

A US study in 2020 found that people with HIV had a 50 per cent higher risk of developing dementia. If Sars-Cov-2 travelled “along brain pathways in a manner similar to HIV then it is possible Covid infection may increase the risk of Alzheimer’s disease”, reflected Dennis Chan, who is leading a study on cognitive impairment in long Covid funded by the UK’s National Institute for Health and Care Research.

Other scientists said the belief that the virus could travel into the wider central nervous system via the olfactory nerve now seemed flawed. “It’s proved incredibly difficult to infect the brain with coronavirus,” said Carson.

Josephson said researchers are analysing spinal fluid samples from living patients in search of “unusual antibodies or inflammatory cells” that could shed new light on long Covid.

Discouraging precedents from history had not so far been repeated, experts suggested.

Clinicians feared the pandemic “would be associated with an encephalitic Parkinson’s that had been described after Spanish Flu”, said Anna Cervantes-Arslanian, a neurologist at Boston University School of Medicine.

But a study she led found only 0.5 per cent of people with severe Covid-19 had meningitis or encephalitis. Around 10 per cent had altered brain function or structure, according to the research published in April in the journal Critical Care Explorations.

Are new treatments being developed?
Researchers led by Chan are using MRI scans to understand the causes of Covid’s effects on memory, thinking speed and decision making. He said his team would also trial cognitive rehabilitation techniques used to treat memory problems after a stroke, such as setting tasks to increase mental focus.

Other scientists are looking at the possibility of new pharmaceutical treatments. Studies are under way to examine changes in tissues and organs that cause, or are caused by, Covid-19 in order to trial treatments.

Josephson said it remained unclear whether impacts on the brain were caused by an overactive immune system or the reverse. However, he said if this could not be quickly established it may be best to go ahead with trialling drugs that modify the immune system, either by decreasing or enhancing it, to help those whose symptoms suggest cognitive impairment.

But disentangling Covid’s impact from other elements only indirectly associated with the virus remains a puzzle-in-progress for researchers.

“Covid’s effects on the brain are real — some people have very discrete, defined conditions and some have things that we don’t understand quite as well,” said Spudich. “The problem is that there are so many other social factors, pressures, stresses related to these pandemic times that it definitely muddies the waters.”

FT : UniCredit and Commerzbank merger talks derailed by Ukraine war

UniCredit and Commerzbank merger talks derailed by Ukraine war
Italian and German chief executives scheduled talks earlier this year but shelved tie-up

UniCredit and Commerzbank were on the cusp of merger talks this year before the Ukraine war scotched a deal that could have kickstarted European banking’s long-awaited cross-border consolidation wave. 

Three people with direct knowledge of the matter told the Financial Times that in early 2022 UniCredit’s chief executive Andrea Orcel planned informal discussions about a potential combination of the Italian lender’s German HypoVereinsbank subsidiary with his opposite number at Commerzbank, Manfred Knof.

The transaction would have formed Germany’s second largest lender with €785bn in assets, 1,000 branches and 48,000 employees. 

Analysts have long seen a tie-up between UniCredit and Commerzbank as one of the most attractive combinations in European banking as there is relatively little regional overlap between the lenders’ German operations.

HypoVereinsbank, which Milan-based UniCredit acquired in 2005 and is more profitable than its German peer, has a strong local footprint in Bavaria and the Hamburg area, while Commerzbank is present across Germany.

The deal, which UniCredit previously explored in 2019 as an alternative to Commerzbank’s subsequently-aborted tie-up with Deutsche Bank, would have been the first big cross-border deal in Europe’s fragmented banking sector.

Orcel arranged a meeting in early 2022 in Germany to discuss the merger with Knof, according to people with knowledge of the discussions. But before details could be thrashed out by the CEOs, Moscow had invaded Ukraine. 

UniCredit instead decided it needed to manage its exposure to Russia before embarking on any large dealmaking. UniCredit is one of a handful of western banks with large operations in Russia.

Orcel has said the group is considering exiting the country and has revealed it stands to lose €5.3bn on the business in a worst case scenario. It has already begun swapping credit portfolios with local lenders.

The prospect of higher interest rates had buoyed European lenders’ shares until the war started, with Commerzbank disclosing a week before the invasion that higher interest rates in Europe would deliver a billion-euro windfall to its bottom line by 2024.

But concerns over the economic fallout of the war, and potential disruptions of Russian energy supplies, have sent share prices downwards since late February -- UniCredit has lost more than a third and Commerzbank fell by 26 percent.

US investors like Capital Group pulled out of European banks over the past three months, selling large stakes in Commerzbank, Deutsche Bank and Barclays. The US fund manager was UniCredit’s largest shareholder, but last week cut its stake from 6.8 per cent to below 4 per cent.

The fragmented nature of Europe’s banking market has been considered a handicap for its lenders, which have lost ground to US rivals on profitability and market share.

EU regulators and policymakers have urged banks to consider combining to improve economies of scale - but no large cross-border deals have taken place with banks complaining that EU capital requirements and differing regulatory regimes make mergers too punishing.

A tie-up between the two banks is still considered the most likely large deal, in part because Commerzbank has the German state as a 15 per cent shareholder after a €23bn bailout in 2008 and 2009, and is seen by analysts as sub-scale.

After a shareholder rebellion that followed years of failures to cut Commerzbank’s bloated cost base, Knof was parachuted in January last year as part of a last-ditch effort to restore profitability. In the first quarter of 2022, the bank’s net profit more than doubled to €298mn, following a better-than-expected performance in 2021.

UniCredit initially approached German officials about a tie-up with Commerzbank in 2017 and prepared a bid three years ago, according to people with knowledge of the moves.

Under the original plans, UniCredit would have amassed a sizeable stake in Commerzbank and merged it with HypoVereinsbank.The combined entity would have been based in Germany while UniCredit would maintain its headquarters and listing in Milan. Commerzbank would retain a free float of shares listed on the Frankfurt stock exchange.

Commerzbank’s market capitalisation has since shrunk from €9bn at the time to €7.8bn, while UniCredit’s stock market value is €21bn, down a third from three years ago.

UniCredit and Commerzbank declined to comment.

>>> US After Hours Summary: DLO +16.9%, AGYS +13.9%, TCS +10.3% higher on earnin

After Hours Summary: DLO +16.9%, AGYS +13.9%, TCS +10.3% higher on earnings; DOCS -16.7% falls on earnings; NCMI +17.9% jump as AMC discloses stake

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: DLO +16.9%, AGYS +13.9%, TCS +10.3%, APPN +1.9% (reaffirms guidance; also Chief Revenue Officer to leave)

Companies trading higher in after hours in reaction to news: NCMI +17.9% (AMC discloses 6.8% stake in NCMI), SPNT +9% (Chairman and CEO resigns to pursue other opportunities), AMC +3.1% (AMC discloses 6.8% stake in NCMI), BAH +2% (wins NASA cybersecuirty contract, according to FedScoop), AMR +1.7% (responds to report from activist short-selling firm), AMWL +0.3% (to shorten earnout period with acquisition of SilverCloud Health), MAA +0.2% (increases dividend), CWK +0.2% (acquires Cresa Partners of Los Angeles), RNR +0.2% (files for $1 bln mixed securities shelf offering), GRIN +0.1% (sells medium range product tanker, acquires a supramax bulk carrier), APPS +0.1% (to restate results for JunQ, SepQ and DecQ)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: DOCS -16.7% (also authorizes up to $70 mln for share buybacks), NXGN -2.4%, KEYS -0.5%

Companies trading lower in after hours in reaction to news: LAB -4.3% (stock offering), ACRE -3.7% (stock offering), CASA -2.1% (stock offering), ROOT -1.5% (launches Root Insurance in Alabama and Florida), LMT -1% (awarded $630 mln Navy contract), DWAC -0.9% (to delay 10-Q filing), HVT -0.1% (increases dividend), RES -0.1% (CEO to transition to Exec Chairman role), FE -0.1% (names new board chair)

>>> US Close Dow +1,34% S&P +2,02% Nasdaq +2,76% Russell +3,19%

Closing Stock Market Summary

The S&P 500 rose 2.0% on Tuesday, as the market was supported by a contrarian mindset and a reprieve in growth concerns. The Nasdaq Composite (+2.8%) and Russell 2000 (+3.2%) raced ahead the benchmark index with about 3% gains while the Dow Jones Industrial Average rose 1.3% 

Ten of the 11 S&P 500 sectors closed higher by at least 1.0%, including five sectors with gains over 2.0%. The information technology sector (+2.9%) claimed the top spot, while the consumer staples sector (-1.2%) was the lone holdout amid an 11% drop in Walmart (WMT 131.35, -16.86, -11.4%) following its disappointing earnings results and guidance. 

The contrarian mindset today was rooted in a BofA Global Fund Manager Survey that showed cash levels at their highest position (6.1%) since 9/11 and the largest underweight position in equities since May 2020. Growth concerns were alleviated by the following developments:

Home Depot (HD 300.95, +4.93, +1.7%) reported better-than-expected earnings results and guidance, United Airlines (UAL 46.97, +3.43, +7.9%) increased its Q2 unit revenue outlook, total retail sales for April rose 0.9% as expected, retail sales excluding autos rose 0.6% (Briefing.com consensus 0.3%), and industrial production for April jumped 1.1% (Briefing.com consensus 0.9%).

In addition, Shanghai reported no new COVID cases for three straight days outside quarantined zones, further supporting its reopening initiative. On a related note, Hong Kong plans to relax coronavirus restrictions later this week while Japan plans to allow small groups of tourists to enter the country this month.

An improved growth perspective helped tame inflation concerns, which were highlighted by Walmart and Fed Chair Powell at a Wall Street Journal virtual event. Home Depot also mentioned inflation pressures, which contributed to an 8.2% yr/yr decline in customer transactions in the first quarter. 

Mr. Powell said the Fed will be more aggressive with rate hikes if inflation doesn't come down in a clear way, but he did preface the comment with an observation that the Fed can be less aggressive if inflation does clearly come down. This was largely consistent with his prior view on monetary policy. 

The Treasury market was in sync with rate-hike and inflation expectations, as well as with the general upbeat mood on Wall Street. The 2-yr yield rose nine basis points to 2.67%, and the 10-yr yield rose nine basis points to 2.97%. The U.S. Dollar Index fell 0.8% 103.35. WTI crude futures fell 1.4%, or $1.59, to $112.21/bbl. 

Reviewing Tuesday's economic data:

  • Total retail sales increased 0.9% month-over-month in April ( consensus 1.1%) following an upwardly revised 1.4% increase (from 0.5%) in March. Excluding autos, retail sales rose 0.6% ( consensus 0.3%) after increasing an upwardly revised 2.1% (from 1.1%) in March.
    • The key takeaway from the report, which is not adjusted for inflation, is that higher pricing helped in the sales growth, yet spending increased across most discretionary categories.
  • Total industrial production increased 1.1% month-over-month in April ( consensus 0.5%), marking the fourth consecutive month of gains of 0.8% or greater. The capacity utilization rate increased to 79.0% (consensus 78.6%) from a downwardly revised 78.2% (from 78.3%) in March.
    • The key takeaway from the report is that it shows ongoing strength in industrial production and exposed the potential for further strength as motor vehicle production is expected to improve with any improvement in supply chains, particularly for semiconductors.
  • The NAHB Housing Market Index for May decreased to 69 (consensus 75) from 77 in April.
  • Business inventories increased 2.0% m/m in March ( consensus 1.9%) following a revised 1.8% increase (from +1.5%) in February.

Looking ahead, investors will receive Housing Starts and Building Permits for April and the weekly MBA Mortgage Applications Index on Wednesday. 

  • Dow Jones Industrial Average -10.1% YTD
  • S&P 500 -14.2% YTD
  • Russell 2000 -18.0% YTD
  • Nasdaq Composite -23.4% YTD

>>> Hedge Funds Dumped Tech And Piled Into Energy In Q1: Full 13F Summary

In addition to the mauling suffered by the OG of all tech investors, Tiger Global, which we profiled earlier and which saw widespread sales and liquidations in its tech-heavy portfolio, a rundown of the latest 13F data reveals that many other hedge funds also cut their exposure to the stock markets worst performing sectors in the first quarter - primarily tech - while significantly increasing their holdings of surging energy shares, according to a Bloomberg analysis of the data. Overall, the moves have been beneficial to the funds with the sectoral trends continuing into the second quarter, and adverse to those funds - like Tiger and its offspring - which retained an overweight exposure to tech.

The S&P 500 fell 5% in the first three months of the year, but there was a wide variance in sector performance. Energy stocks led the way, soaring by 38%, while the worst performing groups were information technology (-8.6%), consumer discretionary (-9.2%) and communication services (-12%), all of which are especially sensitive to rising interest rates.

According to a summary of the latest trends courtesy of Bloomberg's Justin Zacks, investors decreased technology holdings by 1.4%. Among the largest aggregate sales in the group were Microsoft Corp., which saw its stock price decline 8.3% in the quarter, PayPal Holdings Inc. down 39%, and Shopify, down 51%.

The consumer discretionary sector saw a -0.8% decrease in its weighting by large investors. Home Depot Inc. had several large exits as mortgage rates soared to multiyear highs. Nike Inc. and Starbucks Corp. also saw large drops in aggregate holdings as supply chain issues and worries over demand in China due to Covid-19 lockdowns plagued the companies. Polen Capital Management reduced its stake in Starbucks by 12.3 million shares to 849,854 shares in the first quarter.

Funds decreased their exposure to the communications sector by 0.8%, led by large sales of Meta Platforms Inc., which lost 34% in the quarter. Edgewood Management sold 8.4 million shares of Meta in the first quarter, almost its entire position.

Institutional investors increased their weighting in the energy sector by 1.2% in the first quarter, led the sectors largest company, Exxon Mobil Corp., up 35%, as well as oilfield service companies Schlumberger NV, up 38%, and Baker Hughes, up 51% (as we have been saying since late 2020, these names have much upside). West Texas Intermediate crude rose 33% in the quarter as Russias invasion of Ukraine curtailed supply amid strong reopening demand as a spike in Covid-19 cases waned.

Energy is the top performing S&P 500 sector in the second quarter, up 8%, while consumer discretionary (-21%), information technology (-16%) and communication services (-16%) comprise the bottom three again. This is likely helping hedge fund performance in the second quarter relative to an 11.5% decline in the S&P 500.

The best performing S&P 500 stock in the first quarter, Occidental Petroleum Corp., saw its overall weighting increase due to a 96% rise in its share price. But several large holders used the run-up to take profits. Carl Icahn sold his entire stake of 32.1 million shares, while MFN Partners Management exited its position of 10.9 million shares in the quarter.

Epam Systems Inc., the information technology services company with a significant employee presence in Ukraine, Russia and Belarus, was the worst performing in the S&P 500 index in the first quarter, down 56%. Many institutional investors rotated out of the name, including Morgan Stanley, which sold 3.8 million shares.

13F filings from some of the most prominent investors are moving stocks Monday.

  • Carl Icahn also cut his exposure to LNG producer Cheniere Energy Inc. by 40% to 9.72 million shares. A purchase of 644,510 shares of International Flavors & Fragrances Inc. was his only new position.
  • Sachem Head Capital Managements largest position, representing 22% of disclosed assets, is International Flavors, which it cut slightlyby 410,850 shares to 6.43 million in the first quarter.
    • Sachem Head was a buyer of beaten up tech stocks during the quarter, including 253,100 shares of Salesforce Inc., down 16% in first quarter, 2.84 million shares of Opendoor Technologies Inc., down 41%, and 5.72 million shares of Momentive Global Inc., down 23%.
  • Soros Fund Management pared its holdings in transportation and automotive stocks, exiting its 860,002 share position in General Motors Co., its 529,297 share position in Uber Technologies Inc. and its 35,550 share position in Lithia Motors Inc.
    • Soros did not sell any shares of its largest holding, Rivian Automotive Inc., which represents 19% of its disclosed assets, despite a 52% drop in shares during the quarter.
  • Trian Fund Management sold its entire 20 million share stake in Comcast Corp., which fell 7% in the first quarter amid a subscriber slowdown due to a pandemic pull-forward and increased competition. The telecommunications providers success will likely depend on its high margin broadband business,  Bloomberg Intelligence analyst Geetha Ranganathan wrote in a research note Monday.
    • Trian took a new 450,267 share stake in food company Mondelez International Inc. in the first quarter. Unilever Plc is down 1% Monday after Trian disclosed it did not make any purchases of the consumer goods companys stock in the first quarter despite press reports to the contrary.
  • Appaloosas only two new buys in the first quarter were casino stocks, 525,000 shares of Las Vegas Sands Corp. and 225,000 shares of Wynn Resorts Ltd.
    • In contrast, the fund, whose founder David Tepper told CNBC on May 10 that he covered his Nasdaq short, exited 12 of its holdings in the first quarter including the sale of a 1.28 share position in T-Mobile US Inc. and a 2.25 million share position in General Motors Co.
  • Soroban Capital Partners was a seller of big tech in the first quarter, exiting its 1.58 million share position in Meta Platforms Inc., down 34% in the first quarter, and its 531,135 share position in Netflix Inc., down 38%. Its sole new purchase was a 2.03 million share position in Yum! Brands, Inc.
  • Berkshire Hathaway Inc. was a seller of pharmaceutical stocks in the first quarter exiting its 3.03 million share stake in AbbVie and its 5.2 million share stake in Bristol-Myers Squibb Co.
    • Berkshire, which already holds 1.01 billion shares of Bank of America Corp., a position which was unchanged during the quarter, opened a new 55.2 share position in competitor Citigroup Inc., while exiting its 675,054 share stake in Wells Fargo & Co.

Here are some other moves made by prominent funds tracked by Bloomberg:

APPALOOSA

  • Top new buys: LVS, WYNN
  • Top exits: TMUS, GM, DHI, PHM, KMX, ALIT, EWY
  • Boosted stakes in: UBER, AMZN, MSFT
  • Cut stakes in: FB, MU, PCG, M, XLE, GT, GOOG, XOP

BAUPOST GROUP

  • Top new buys: GTN, NE
  • Top exits: PSTH, NLOK
  • Boosted stakes in: EHC, FISV, DBX, GOOG, IS, NUVB, QRVO
  • Cut stakes in: FB, INTC, VRNT, MU, DBRG, ATRA, JOBY

BERKSHIRE HATHAWAY

  • Top new buys: OXY, HPQ, C, PARA, CE, MCK, MKL, ALLY
  • Top exits: ABBV, BMY, WFC
  • Boosted stakes in: CVX, ATVI, FND, RH, GM, AAPL
  • Cut stakes in: VZ, STOR, RPRX, KR

COATUE MANAGEMENT

  • Top new buys: DOCU, LCID, NVAX, PANW, ENPH, AMD, BYND
  • Top exits: BZ, LRCX, PFE, CFLT, SHOP, AMAT, MA
  • Boosted stakes in: SQ, PTON, DASH, MRNA, TSLA, UBER, PARA
  • Cut stakes in: RIVN, DIS, AMZN, PYPL, BNTX, BEKE

CORVEX MANAGEMENT

  • Top new buys: CEG, AES, FMX, CRC, SWX, PSTH
  • Top exits: PLAN, EXC, CRM, TMUS, DIS, ZNGA, MA, V
  • Boosted stakes in: FIVN, AMZN, UBER
  • Cut stakes in: MGM, GOOGL, JPM, CCEP, MSFT, EQRX

DUQUESNE FAMILY OFFICE

  • Top new buys: TECK, CTRA, PXD, PNC, CVE, ZEN, WDAY
  • Top exits: GOOGL, PANW, CVNA, ABNB, SBUX, LYV
  • Boosted stakes in: CVX, MSFT, SMAR, TMUS, KBR, PLTR
  • Cut stakes in: BKNG, SNAP, FLEX, SE, EXPE, DISH

ELLIOTT INVESTMENT MANAGEMENT

  • Top new buys: SU, DO
  • Top exits: DELL, HTA, DUK, ARNC
  • Cut stakes in: EVRG, VAL, NE
  • Boosted stakes in: MPC, ETWO

GREENLIGHT CAPITAL

  • Top new buys: SWN, WFRD, INSW, SNX, XLE, FCG, OIH
  • Top exits: JACK, SONO, TWTR, CNXC, FREY, SATS
  • Boosted stakes in: KD, GLD, CIVI, CC, LIVN, REZI
  • Cut stakes in: GRBK, CPRI, BHF, GPRO, VSCO, ME

ICAHN

  • Boosted stakes in: IFF
  • Top Exits: OXY
  • Cut stakes in: LNG, NWL, DK

JANA PARTNERS

  • Top exits: M, LPSN
  • Boosted stakes in: ZEN
  • Cut stakes in: THS, LH, SPY, EHC, MRCY

LONE PINE

  • Top new buys: TSM, FB, TEAM, DKS, BILL, TMO, HUBS
  • Top exits: BEKE, ADBE, SNOW, NTES, CFLT, PVH
  • Boosted stakes in: SQ, MSFT, RH
  • Cut stakes in: SHOP, SNAP, MA, UNH, DASH, BBWI

MAVERICK CAPITAL

  • Top new buys: SQ, WSC, COUP, COST, FIVE, BURL, LULU
  • Top exits: ATVI, ASO, SE, DD, CFLT, PCOR, BHG
  • Boosted stakes in: TMUS, OSH, ULTA, DKS, SEAS, UAA
  • Cut stakes in: CPNG, NFLX, LRCX, FB, ADBE, V, AMAT

SACHEM HEAD CAPITAL MANAGEMENT

  • Top new buys: ZEN, MNTV
  • Top exits: KBR, DEN
  • Boosted stakes in: LIVN, CVNA
  • Cut stakes in: IFF, UBER, FLEX, USFD

SOROBAN CAPITAL

  • Top new buys: YUM
  • Top exits: FB, FIS, NFLX, MA
  • Boosted stakes in: CVE, X, AA, NTR
  • Cut stakes in: LOW, MSFT, ADI, V

SOROS FUND MANAGEMENT

  • Top new buys: ZNGA, FRSH, TEAM, LCID, TJX, MGM, STRY
  • Top exits: ATVI, GM, ALLY, UBER, MQ, OMF, HAIN
  • Boosted stakes in: CERN, GOOGL, JPM, NKE, ACN, INTU, CRM
  • Cut stakes in: DHI, LBRDK, ARMK, PTRA, ELAN, OPEN

STARBOARD VALUE

  • Top new buys: HUM, MRCY, KSS, LPSN, ETAC, IRRX, TGR
  • Top exits: SST
  • Boosted stakes in: GDDY, CYXT, WTW, ARTE, ACAQ, IQMD
  • Cut stakes in: ACIW, CERN, ON, CTVA, CVLT, IWM

THIRD POINT

  • Top new buys: CSX, AA, OVV, SU, MOS, IR, CVE, WDC
  • Top exits: GOOGL, UPST, ACN, CSGP, BURL, DIS
  • Boosted stakes in: S, EQT, ZEN, HTZ, DD, CANO
  • Cut stakes in: AMZN, INTU, MSFT, RIVN, DHR

TIGER GLOBAL

  • Top new buys: STRY, DAVE
  • Top exits: NFLX, ADBE, COUP, RUN, PYPL, ASAN
  • Boosted stakes in: CRWD, LI, MNDY, SQ, BZ, S, TOST
  • Cut stakes in: ZM, FB, DASH, UBER, AMZN, DOCU

TRIAN FUND MANAGEMENT

  • Top exits: CMCSA
  • Boosted stakes in: IVZ, MDLZ, GE, JHG, FERG
  • Cut stakes in: SYY, PG

VALUEACT

  • Top new buys: BLD
  • Boosted stakes in: NSIT, KKR
  • Cut stakes in: STX, TRN, BHC, SLM

 

>>> Fed Chair Powell: There is broad support on FOMC for having 50bps hikes on t

Fed Chair Powell: There is broad support on FOMC for having 50bps hikes on the table for next two meetings; That is short of a prediction, though - WSJ event comments
- If economy performs as we expect, then 50bps hikes will be on the table
- We know this is a time for the Fed to be tightly focused on getting inflation back down to 2%; Ongoing rate increases are appropriate
- We need to see growth moving down from high levels; We need supply side to have chance to catch up
- Financial conditions have tightened quite a bit
- It's very difficult to think about giving forward guidance
- We have the tools and resolve to get inflation down
- We need to see inflation coming down 'in a clear and convincing way'; If we do not see that, we'll have to move more aggressively; If we see inflation coming down, can slow pace of hikes
- Monetary policy like to work through expectations; Markets are pricing in a series of rate hikes
- By standards of central bank practice, we're moving as fast as we have in several decades
- Underlying strength of the US economy is really good right now; Labor market remains extremely strong
- No one should doubt Fed's resolve
- We are raising expeditiously to a more normal level, Will reach it in Q4
- We don't know where neutral is or where tight is; Will be looking meeting by meeting and data point by data point about what's happening in the economy
- We will continue raising rates until we see inflation coming down; There will be no hesitation about that

WWD : L Catterton Buys Bellami, Building in Hair Extension Business

L Catterton Buys Bellami, Building in Hair Extension Business
The private equity giant sees a wellness angle and plenty of room to grow in the category.

L Catterton is going bigger in hair extensions — and sees plenty of opportunity for more growth as the category develops.

The consumer private equity giant started in the area last year, acquiring control of extension specialist Beauty Industry Group. Now, BIG has closed a deal to buy Bellami Hair, expanding its portfolio to 14 extension brands and opening up a new avenue of distribution.

Bellami, which was founded by Nikki Eslami and Julius Salerno in 2012, skips the distributor and sells its 100 percent Remy human hair extensions directly to salons with independent sales reps, a digital approach and educational support specialists.

That’s another angle on a category that Derrick Porter, chief executive officer of BIG, said is still in the early days of a dramatic growth curve.

“Right now only about 15 to 20 percent of hairdressers are offering hair extensions as a service,” Porter told WWD. “And only about 3 percent of American women are using hair extensions as a product.”

It took Porter a while to see the modern consumer potential in the age-old practice of applying hair extensions.

“Fifteen years ago we were convinced that hair extensions were a fad,” said Porter, who had a third-party logistic company with his wife that worked with the Donna Bella Hair brand. “It was something that was really for the rich and famous movie stars and wasn’t talked about at all.”

But after getting a closer look at Donna Bella’s business, Porter went to the owner and said: “Your business is way better than mine. You have the ability to scale.”

That led to Porter becoming a partner, but still not a believer in the long term.

“We jumped in with both feet,” he said. “The first four or five years we were convinced that it was a fad and that it would end any day.”

After it didn’t fade, he thought maybe it was a trend that would go a little longer before finally realizing there was a more substantial business there.

“Wow, we’ve actually created a category where stylists are making a sizable amount of income from the service of hair extension,” he recalled thinking as the business solidified.

“Hair extensions might even be the wrong word for what we do now,” Porter said. “What we’re learning is that almost 67 percent of our customers purchase hair extensions to solve a problem.”

These include alopecia, thinning hair and other hair issues that can take an emotional toll and give BIG a powerful connection to consumers.

Porter compared hair extensions to hair color, a category that over the past 50 years has grown to become transformative for both the beauty industry and consumers.

“Hair extensions are ready to go prime time,” Porter said. “It’s already starting when you look at the data; we just have really never gone out and talked about it.”

Looked at as an emotional bastion — and one with big growth potential — the category also sits into a sweet spot for L Catterton, which takes a thematic approach to the market and has been putting money into the wellness category broadly with investments in Peloton, the Wells Group fitness company in China and others.

L Catterton, which has backing from LVMH Moët Hennessy Louis Vuitton, touts itself as the world’s largest consumer-focused private equity company. In addition to BIG, it owns Birkenstock, Bliss, Ganni, Etro and many others while holding minority stakes in Rihanna’s Savage x Fenty, Rhone, Gentle Monster, The Honest Company and more.

Avik Pramanik, a partner at L Catterton, said BIG plays in an area that is “completely misunderstood by both observers in the beauty category and by consumers.”

Where the perception might be that it’s the 25-year-old Ariana Grande fan looking for hair extensions, the reality is that most of the consumers are over 35 years old and are more concerned with self esteem, Pramanik said.

“It has never been more important to help this consumer address hair problems,” he said, adding that engagement opens up other opportunities. “We want to, over time, help that consumer in other ways that address her hair challenges.”

In the meantime, the category is simply good business.

“The profit pool in hair extension is good for almost everyone that touches it,” Pramanik said.

That extends from the people who sell their hair — giving about 15 percent to 20 percent of their hair in the process — to the stylists who specialize in the process. (BIG is a member of the United Nations Global Compact and publishes an environmental, social and governance report detailing priorities and safeguards in its operations.)

Pramanik said there are always new artists who are coming up with hair extension techniques and building new brands that can develop to become potential acquisitions for BIG, which has back-end teams that handle finance, demand forecasting, media buying and so on.

“After joining BIG, they have the opportunity to do what they love and not get bogged down,” he said.

Salerno, who leads BIG’s latest brand as CEO, said: “This transaction is an exciting milestone for Bellami as we continue cultivating methods to reach our consumers through authentic and effective channels. I look forward to working closely with the entire BIG team to bring Bellami to even more customers and accelerate our important investment in stylist education.”

Eslami, the brand’s other founder, will stay on as an adviser to BIG, noting: “Their like-minded focus on elevating the hair solutions category marks a natural evolution of Bellami’s mission over the past decade. With BIG’s support, Bellami will expand its reach in meeting the diverse hair needs of women, whether it be thinning, alopecia, dryness, postpartum hair loss, damaged hair, or length. It is no surprise that hair is emotional, and a critical part of many people’s identity. We want it to be a source of confidence.”

Terms of the deal were not disclosed.